Archive for March, 2009

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“Would you like the formula for success? Double your rate of failure.”Thomas J. Watson Sr. (1874-1956)

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“I skate to where the puck is going to be, not to where it is.”Wayne Gretzky

“See, when Metcalfe takes the stage, everyone wants to hear the old stories and about how he co-invented Ethernet, a stunning breakthrough in the ’70s and a key way computers talk to each other today. But Metcalfe would prefer to talk about what lies ahead.

Metcalfe, who lives in Boston now, was telling me this at the end of an informal lunch at the computer museum with about 30 of the institution’s backers. He’d just finished provoking, inspiring and entertaining the lunch crowd with a brief talk about the future of energy production. A talk that he warned would be in parts “controversial and annoying.”

But that’s the way Metcalfe is. Not so much controversial and annoying, but old-school Silicon Valley. He’s not afraid to say what he thinks. But he doesn’t say it just to upset people. He says what he says because he thinks ideas have value, that ideas are the way things get invented and problems get solved. If you disagree with him? Good. Let’s hear it.”

5. Performance over price: In fact, for over half of these customers performance was even more important than price! (If you haven’t stopped reading, please do so. To find a customer who says anything is more important than price is the Holy Grail for a marketer. Few times in his/her life will they find such a market.)

Quote is from a guest post on the “What Would Dad Say” blog by Cecily Drucker entitled “Secrets of a 64 year old Startup Virgin” [blog and post have disappeared and are not available from archive.org] My analysis of the post is here: “Cecily Drucker’s Startup Secrets”

“To see what is in front of one’s nose needs a constant struggle.”
George Orwell in “In Front Of Your Nose” (First published: Tribune. London — March 22, 1946.

Longer excerpt:

To see what is in front of one’s nose needs a constant struggle. One thing that helps toward it is to keep a diary, or, at any rate, to keep some kind of record of one’s opinions about important events. Otherwise, when some particularly absurd belief is exploded by events, one may simply forget that one ever held it. Political predictions are usually wrong. But even when one makes a correct one, to discover why one was right can be very illuminating. In general, one is only right when either wish or fear coincides with reality. If one recognizes this, one cannot, of course, get rid of one’s subjective feelings, but one can to some extent insulate them from one’s thinking and make predictions cold-bloodedly, by the book of arithmetic. In private life most people are fairly realistic. When one is making out one’s weekly budget, two and two invariably make four. Politics, on the other hand, is a sort of sub-atomic or non-Euclidean word where it is quite easy for the part to be greater than the whole or for two objects to be in the same place simultaneously. Hence the contradictions and absurdities I have chronicled above, all finally traceable to a secret belief that one’s political opinions, unlike the weekly budget, will not have to be tested against solid reality.

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“Work as if you live in the early days of a better nation.”Alasdair Gray

We will cover a variety of proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls at two weeks, four weeks, 8 weeks, and 13 weeks to help you track your progress. You will leave with a one page action plan, a workbook, and 90 days of access to a private workspace with the workshop materials to enable you to execute one or two marketing strategies to bring your business more customers.

Here are some blog posts that detail aspects of what we cover in the workshop:

You are not alone. We talk to firms every day that are challenged by the current economic environment. Let me suggest a couple of things you can do:

Come to a Bootstrappers Breakfast™ and compare notes with other bootstrapping entrepreneurs for the price of your breakfast. We host four a month, the next one is 9AM Friday March 27 at Red Rock Coffee (second floor) in Mountain View at 201 Castro Street. Here is the calendar of events.

Sign-up for our “Getting More Customer” workshop next Tuesday. It’s goes from 8:15 to 1pm and includes lunch, you will leave with a 90 day plan and as part of the workshop we follow up with you four times–at two weeks, four weeks, eight weeks, and 13 weeks–to help you stay on track.

Make a list of thirty people that you have enjoyed working with. Reconnect. Offer to meet for coffee or a meal. Suggest an event that would be of interest to both of you. Write an endorsement on LinkedIn for them to let them know how much you appreciated working with them. See what you can do for them and let them know what kind of firm constitutes a good prospect for your products or services.

Contact firms that fell off of your prospect list and former customers and see how things have worked out for them. Perhaps you can help them informally, perhaps they are interested in becoming a customer (again).

Give me a call or drop me an e-mail (see contact info for coordinates) to schedule a free one hour consult on your current situation. Depending upon where you are we can work through a map of the path from idea to revenue if you haven’t launched or spend some time debugging your sales process if you have and you aren’t where you want to be.

Update Sat-Mar-28One thing that will help to give the discussion some structure is answering at least one of the following set of questions. I suggest this because these will be the kinds of questions I will be asking to understand where you are:

We are clearly in a recession that will test many startups in Silicon Valley and the rest of the United States. Those with determination and a willingness to embrace creative improvisation are more likely to survive.

Steve Blank’s “Four Steps to the Epiphany” was a source inspiration in founding SKMurphy, and I was delighted to see that Steve has started blogging and it seems clear to me that he is using his blog to develop a companion volume. This one is more personal and uses specific experiences from his life to show his inspiration for the customer development model.

He has a great two part series on his time at SuperMac and lessons learned here. What follows is not a summary of the lessons learned that were particular to SuperMac but an outline of how he actively sought both data and serious conversation with his customers (SuperMac was a turnaround, he rightly points out that most new startups don’t have the luxury of 15,000 customer registration cards) to test and evolve hypotheses that he explicitly documented at the start of his investigation.

After writing up the questionnaire, and before I called the customers, I wrote a one page summary of who I thought the customers were, what markets they were in, how and why they bought, etc. I was curious to see how close to my hypothesis the actual customer answers would be.

At the end I had a three-page questionnaire that I timed in a practice session with one of my marketing people. I could get it done in twenty minutes.

Three hours and ten customers later I was beginning to feel like this would work.

For the next three weeks I spent 8 hours a day calling customers and another 6 hours a day managing my new department. I’m sure the CEO thought I was crazy. But after three weeks and three hundred customer calls I was done.

After three weeks I stopped the customer survey when I started hearing the same stories again and again. Looking at the customer data I realized there were some potential “gotchas”:

This was a survey of those who had already bought product from us. Those who didn’t buy from us might have completely different characteristics

This survey could only reach those who sent back their registration cards. Those who didn’t might be different.

Too often we talk to teams that want to survey prospects with web forms or e-mail and avoid conversation because it’s “more efficient” to collect data automatically. I think the single most important thing to take away from Blank’s SuperMac narrative was that he prepared himself to be surprised. If he just done an automated survey he would not have learned nearly as much. And by writing down his hypotheses he prepared himself to be able to change his mind and to see what he had learned.

Related blog posts on the value of conversation with prospects and customers:

Sales 2.01
In our experience, it’s incumbent on startups to initiate conversation. Not the typical “sell, sell, sell” approach that established firms encourage in their sales teams to “maintain control of the conversation”–that’s an interrogation–but one where you are genuinely committed to understanding the prospect’s needs and are open to letting them teach you something new about your product.

User Communities are Critical for Complex Products
We spend a lot of time with firms helping to make sure that not only their offering but their internal metrics and scorekeeping mechanisms are keeping them aligned with the purposes of communities they wish to serve.

Best Way to Get Feedback From Customers is a Conversation
One temptation to avoid when trying to get customer feedback on your product is premature automation. There are a number of excellent low cost survey tools out there (we use SurveyMonkey and Zoomerang and have been happy with both) but there is a real risk when you only have a dozen or two dozen early customers that a questionnaire may only give you the answers that you are looking for, not the information that you need.

Daniel Nenni has a thought provoking first post on his new blog “The Mathematics of EDA.” He suggests that many EDA markets segments are “winner take all” in the manner of a poker pot, and that DAC is in need of reform to continue to be a good deal for larger EDA companies. He offers two proposals: ban large booths and segregate the show floor by market segments. The first could be achieved unilaterally by the vendors themselves; the second is worth more consideration but it may be hard to discern, much less agree on, the emerging segments.

Fundamentally a trade show is a stag hunt (see “cultivating a community” for more on this paradigm) It’s an effort by a collection of firms to create a larger shared opportunity that even when divided yields them a larger benefit than if they prospected separately. Any one hunter or set of hunters can defect from the larger hunt and either hunt on their own or form a smaller hunting party, but if they would have been better off with a smaller share of a larger pie, at some point they will return (for example, a slimmed down Cadence is re-committing to DAC).

I think it’s important to remember that EDA suppliers normally have little market power: the top 25 or so customers are larger than any of the EDA firms, and once you leave the top 10 EDA firms the bottom 97% are smaller than probably 90% of the buyers (by total spend not firm count). There are many multi-billion dollar semiconductor and system houses (there many multi-billion dollar divisions: e.g. does TI Europe always follow TI US?) and at the moment Synopsys is the only true one billion dollar EDA firm (Mentor and Cadence can be included if we allow for rounding up).

Unlike a poker pot, few EDA markets are winner take all. At a minimum it’s at least high-low game with two winners and there is typically room for at least one if not two other players. There are some exceptions (e.g. license management) but because the customers want to differentiate they are normally willing to support two or four vendors in a segment.
Trade shows are a fantastic deal for startups. You can put your entire team in a booth (in shifts if it’s a multi-day show) and talk to many real prospects for as long as they will listen. This does not mean I believe that DAC is by any means perfect the way that it is (e.g. see “Seven Tips for Encouraging Bloggers to Write About A Conference“), just that trade shows are inherently valuable for startups, and startups will be a part of Design Automation until they repeal Moore’s Law.

Dan talks about events like SNUG, CDN Live, and Music competing against DAC, it’s true to some extent but these shows are limited in what they can ultimately accomplish. They are great events for customers and they allow larger vendors to have real user groups with real dialog. But they don’t allow the major firms to engage non-customers, either in existing or new segments. And while customer intimacy enables evolutionary innovation, non-customers are where important changes and disruptive innovation often start.

It’s also important in the leading edge of Design Automation for early customers to meet the vendor team and form a direct impression of their credibility and trustworthiness. One of the largest risks a firm faces in working with a startup is how the startup will perform when things go wrong. Nothing new ever works. In fact, because major EDA customers are often seeking maximum differentiation from each other, they want to engage before the tools are fully baked so that they can start down the learning curve and be prepared to take full advantage when they do work.

This is not an excuse for poor quality tools, but a property of emerging technologies and early markets. Smart customers double buffer: they run two or three toolsets or versions in parallel to shield themselves from both shortfalls in capability in mature tools and anticipated errors in new tools. This is actually an argument for more complex shared configuration management (with automated rollback embedded in the delivery/upgrade process) of tool versions, libraries, and IP blocks between various parties in the capability delivery chain than it is for SaaS. Because major EDA customers are seeking differentiation, they want their own custom flow from unique configurations of off the shelf software.

Net net, even if the top six EDA firms pull out, DAC will continue: there will still be 300 smaller firms with an amazing collection of new tools left. That’s a big enough draw to attract decision makers from many if not most of the major and mid-tier customers. 300 or so startups and small firms each paying 5-10K for a booth generates enough money to fund a decent show–50 firms paying 5K would–and certainly an innovative one.

And EDA customers will continue to require innovative tools that allow them to differentiate from their competitors. Few customers will bet all future designs on one company–even if it’s Synopsys–and even if one firm does, it’s competitors lose nothing by at least evaluating, if not spending enough to keep one or two competitors alive in each segment.

March 19 “Leveraging Your Referral Network to Grow Your Business”
A Bay Area Business Growth Meetup, this briefing includes a referral exercise to help you make the most of your existing network and present a model for how business owners can leverage customer referrals to drive more business. You will leave with a list of folks to contact for more referrals.

March 31 Getting More Customers – A 90 day Plan in Palo AltoHighly rated SKMurphy workshop. This is not a sales pitch but a real working session that impacts attendees’ business. We will cover a variety of proven marketing techniques for growing your business: attendees select one or two and develop a plan to implement them in their business in the next 90 days.

I spent Monday through Wednesday of this week at O’Reilly ETech and was struck by how infrequently the audience met the presenter’s expectations. We rarely seemed to be large enough. Since this is about emerging trends I picked a number of oddball sessions and saw the same reaction several times: the presenter waiting five or ten minutes past the start time for the talk hoping more folks would arrive. At least they could have started informally and interacted with the folks who had showed up. Some suggestions for your next talk, no matter how well attended it may be:

Attendance is a function of marketing and competition. Once you are in the room and it’s time to start, give the best talk that you can.

Anytime you give a talk, ask questions of the audience. In a large group you can ask multiple choice show-of-hands questions, and in a small group you can solicit short comments. These are the folks who cared enough to show up: learn more about them and why they came.

Once your talk starts you have to “be here now” and focus on the audience in the room, not the one you were hoping for. Don’t lament the poor attendance to the attendees: they’ve voted with their feet already.

If you have a presentation that is modular and you are giving a shorter version, don’t let the seams show. One workshop presenter mentioned perhaps half a dozen topics that would be covered in a full day version of the workshop but that he was omitting from this half-day version. I can see mentioning this in a summary at the end or once in an overview, but it was annoying to hear again and again that we wouldn’t be covering a topic.

Personal confession: we do the Bootstrapper Breakfasts, which are free events where not everyone who registered actually decides to get out of bed and be there by 7:30AM. About three years ago we had been doing them for about six months when I attended another business networking breakfast–also at 7:30AM–where the moderator kept lamenting to the four folks besides myself who had showed up that more people had signed up. He left the room to look for strays and delayed for twenty minutes until another person arrived. Once we actually got started it was a very interesting conversation. I realized then how I looked to attendees when I lamented that some folks who had registered were not here yet, and that just getting started was always better than waiting and/or wringing my hands.

Here’s a couple of sources for free public domain photo, clipart, cartoons and images. They are royalty free, not copy-righted and available for personal and commercial use. These stock photos are high resolution and high enough quality for print and websites.

Francis Fischbach attended the first Sales 2.0 conference in November of 2007 and blogged about it in “Inside Sales 2.0: A Report From the Front Lines.” I just realized that we missed the 2009 version that was held this week so I am recycling two comments that were added to Francis’ original post since I think they are still useful. And we will have to make it back next year to Sales 2.0, it looks like it’s becoming a very useful conference.
At the time Craig Klein commented:

Isn’t Sales 2.0 about building new pathways using technology that give the customer self serve access to information and letting the customer “pre-qualify” themselves by virtue of their actions before a sales rep spends time with them?

Jim Sterne of Target Marketing wrote a great book in 1996 called “Customer Service on the Internet” that’s now in it’s second edition that outlined how savvy firms were allowing customers to satisfy their service needs using the Internet. The implications for the sales process were clear then. The challenge that many startups face is that they are still on the “sales learning curve” and can’t effectively anticipate enough of their prospect’s questions to quality them without a conversation.

I am not sure we have a good definition for Sales 2.0, perhaps by the time we get to Sales 2.1 or 2.2 things will have settled down a bit. The Sales 2.0 that the blog post title refers to is just the name of the conference, and like “39 minute cleaners” just because something has a particular name doesn’t imply a warranty or guarantee of results. Not every self-titled next generation or paradigm shift actually obsoletes established practice: if and when “Sales 2.0? actually arrives it will be called “sales” for the same reason that very few people refer to cars as “horseless carriages.”

However, we are big fans of the cluetrain manifesto and the perspective it offers on the impact of Internet-enabled communication on customer development–sales, marketing and business development. I worry that the premise of your definition–”pre-qualify based on self-service access to information before a sales rep spends time”– sounds more like an attempt to avoid a conversation that could form the basis for a relationship, a relationship that might lead to a sale.

In our experience, it’s incumbent on startups to initiate conversation. Not the typical “sell, sell, sell” approach that established firms encourage in their sales teams to “maintain control of the conversation”–that’s an interrogation–but one where you are genuinely committed to understanding the prospect’s needs and are open to letting them teach you something new about your product.